Tax Implications - American on WHV (462) work from Austrlia for US Company

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Tax Implications - American on WHV (462) work from Austrlia for US Company


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Old 27th February 2015, 06:59 PM
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Default Tax Implications - American on WHV (462) work from Austrlia for US Company

Hello Everyone!

I am new here and not sure if something similar has been discussed here before; if so – please forgive me. It's a unique situation for me.

I am American traveling to Australia in two (2) weeks on Working Holiday Visa (462). My current employer, (in the US) asked if I will be interested to do some part-time work remotely while I am in Australia. So, I thought why not? Extra income not going to hurt – right?! However, after talking to payroll department and few other folks I heard different things such as:

1.I will be double taxed; by Australian Government and US Government. I will be taxed in the country I am physically working first (*Australia) and then in the USA.
2.Because I am on WHV (462) I am limited to work six (6) months for any company – even if working remotely.
3.Australia and the USA have a tax treaty so that you will not have to pay double taxation if you are earning income in both countries.


Which one is right? Does anyone have any experience working remotely for US firms while on WHV? What are the tax implications for this sort of arrangement?
As far as I know, I can work only up to six (6) months for each employer in Australia. How can WHV (462) limit me to work for US company? Secondly, is it true I will be taxed by both countries? I understand If I work for Australian company, in Australia which is I am planning to do; I will be paying taxes to Australia. Now, if I am permanent resident in Australia and working for US company that’s different and will pay taxes probably to both countries… but, in my situation I am just traveler, and does Australia care where money come from to my bank account? My address, bank account and everything else remains the same. I get paid by direct deposit to American Bank and then I’ll just transfer money to my Australian Bank.

I plan to work 5 – 10 hours a week. Now, If I get taxed by both countries, then maybe it’s not worth it? Any suggestions would greatly appreciate. Thank you in advance! P.S. I dont want put at risk myself or company... so looking for right answer. Thanks

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Old 28th February 2015, 01:50 PM
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Hi avinokurov,

Let me start off by saying that in Australia you will be a 'foreign resident' for tax purposes, rather than an Australian resident (see here for tax residency status).

The tax rate for foreign residents is 32.5c for every $1 under $80,000 (see here for tax rates). Unfortunately you will not be able to claim the tax-free threshhold.

You can work out what tax will be withheld from your pay by your employer here.

The reason why the working time is limited to 6 months is because there are numerous tax office rulings that state that 6 months is long enough to determine whether a person is a foreign resident or an Australian resident for taxation purposes.

The income you earn will not be subject to double taxation (see here).

If your main purpose for going to Australia is to work, then I would recommend the 457 visa instead, which is valid for up to four years
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Last edited by _shel; 28th February 2015 at 03:27 PM. Reason: merged
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Old 28th February 2015, 03:31 PM
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Actually he is likely to be a resident for tax purposes so long as he doesnt hold lots of assets or have dependents outside of Australia.

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Old 28th February 2015, 09:42 PM
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https://www.ato.gov.au/Calculators-a...ou-a-resident/ determines your residency status while in Australia

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Old 1st March 2015, 01:04 AM
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Most people on WHVs end up becoming residents for tax purposes. However, if you are a resident for tax purposes but are on a temporary visa, you may be considered a temporary resident and thus exempt from taxes on foreign income.

https://www.ato.gov.au/Individuals/I...-introduction/

You will still need to file your US tax returns as usual. If you end up working at all while in Australia for an Australian company, you'll need to claim that on your US tax returns as well (US citizens are taxed on worldwide income regardless of where they reside or where the income is earned).

It's important to speak with a tax professional who is fully versed in US and Australian tax law if you are planning to undertake this sort of endeavour. You really shouldn't take advice from randoms on an internet forum who are probably not tax professionals and do not understand the intricacies of tax laws in both countries.
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Old 1st March 2015, 05:17 AM
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Thank you everyone for responding to my post! This was an eye-opening.

One more question: After talking to my employer, we decided to change my status from "employee" to an "Independent Contractor". Here is my question, since I hold Working Holiday Visa (462) and it limits me to work only six (6) months for each employer, would it be better option to get 457 visa? According to my research, 457 visa is given through employer's sponsorship. Not sure how challenging it would be to find Australian employer that can sponsor my stay. However, I have HR Consulting Firm in the US and was wondering what visa I could possibly get to stay longer in Australia, work from Australia for US companies’ and work in Australia. Any suggestions, greatly appreciated. Thanks guys!

Alex

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Old 1st March 2015, 05:41 AM
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457 is quite complex. The employer needs to be approved as a Standard Business Sponsor (SBS), which entails a ton of criteria to meet, then nominate a position (again lots of work), then you can apply for the nominated position

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